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Reform Reading: CFTC delays derivatives rules until end of year

House Republicans aim to cut CFTC funding, keep SEC spending flat

1:43 pm, June 15, 2011Updated: 12:19 pm, May 19, 2014

Deutsche Boerse, based in Frankfurt, plans to acquire NYSE Euronext in a deal that would create the world's largest exchange operator and give the combined company a dominant share of European derivatives trading.

The sweeping Dodd-Frank financial reform law was enacted by Congress last summer after the U.S. banking crisis and housing collapse of 2007-08.

But it left the details to more than a half-dozen agencies which are now drafting rules to regulate the multi-trillion-dollar derivatives market, set bank capital standards, designate systemically-important financial institutions, encourage whistleblowers, track credit rating agencies’ accuracy, and launch the Consumer Financial Protection Bureau.

June 21, 2011

June 30, 2011

A daily round-up of analysis, commentary and news about the Dodd-Frank financial reform law.

Derivatives delay - The Commodity Futures Trading Commission agreed on Tuesday to delay for six months, until Dec. 31, the effective date for derivatives registration and other requirements.

Certain derivatives-related requirements were mandated by the Dodd-Frank law to automatically take effect on July 16, on the assumption that the CFTC would have completed writing rules to police the multi-trillion-dollar market. The CFTC and the Securities and Exchange Commission, which has a smaller regulatory role,- have fallen behind in rule-writing.

More than half of the 387 sets of all Dodd-Frank rules have yet to be proposed, according to the Wall Street Journal. Some Obama administration officials, including Treasury Secretary Tim Geithner, are worried that delays could sap the momentum to carry out financial reforms as the 2008 global crisis recedes farther into the past, the newspaper said.

Funding for SEC, CFTC - Funding for the Securities and Exchange Commission would be flat at $1.2 billion in fiscal 2012 under a bill approved on Wednesday by the Republican-controlled House Appropriations Committee. The lawmakers rejected a request from the Obama administration to boost SEC funding by $222 million to help pay for its new responsibilities under the Dodd-Frank law.

The panel also voted to strip the Consumer Financial Protection Bureau of its independent funding, and force the new agency to seek annual funding from Congress beginning in 2013.

On Tuesday, House Republicans said they would cut the Commodity Futures Trading Commission's 2012 budget by 15 percent from its current level.

Consumer Financial Protection Bureau– The new consumer protection agency officially begins work in just over a month, but if the White House fails to install a director by then, the bureau will be crippled and unable to exercise key powers such as policing payday lenders and non-bank financial firms.

Without a Senate-confirmed director, the Consumer Financial Protection Bureau will likely spend its first year facing legal questions over the scope of its authority, reports Dow Jones Newswires. President Barack Obama faces a threat from 44 Republican senators that they will reject any nomination unless the agency is restructured to lessen the director's power.

Capital standards– U.S. bank regulators Tuesday set a minimum amount of capital that the nation’s largest banks must hold against losses.

Previously, the largest U.S. banks – those with at least $250 billion in assets – relied on their own models to calculate their capital levels which were often less than that of community banks. Now, under a Dodd-Frank provision, banks must calculate the amount of capital based on formulas used by community banks as well as those used under Basel II, a global bank accord. The big banks must use whichever measure results in a higher capital requirement.

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